Friday, December 14, 2007

Minnesota Supreme Court Says "Charity" Requires Free or Reduced Charge Goods or Services

In Under the Rainbow Child Care Center, Inc. v. County of Goodhue, (December 6, 2007) the Minnesota Supreme Court ruled that an organization cannot be considered "charitable" under the Article X, Section I of the Minnesota State Constitution unless it provides free or reduced cost goods or services, stating:

It is, thus, inherent in the concept of charity that there is a gift—that is, the services, goods, or whatever is conceived as the charitable benefit must be provided to the recipients of the charity without requiring them to pay full value for it.  Nevertheless, the expanded legal definition of charity that has evolved in the context of tax exemptions does not require that the charitable benefit be provided to all recipients entirely free of charge.  Therefore, the third North Star factor has been refined to require that the charity be provided “free of charge, or at considerably reduced rates.”  Cmty. Mem’l Home, 573 N.W.2d at 87 (emphasis added).  And the “considerably reduced rates” requirement has been described as meaning “considerably less than market value or cost.”  Id.

The dissent argued that the 4-3 majority dilutes the concept of "charity" by focusing exclusively on the charity's funding mechanisms. 


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